Leasehold: VON POLL IMMOBILIEN - The Podcast
In encyclopedia episode 2 of the VON POLL IMMOBILIEN podcasts, Tim Wistokat, attorney and head of the legal department at VON POLL IMMOBILIEN, and host Petra Konradi perform an amazing interview on the significant subject of leasehold.
For whom and under what scenarios is ? And which points should potential consumers absolutely think about? You can listen to the exciting conversation about these and other topics here now directly or check out through as a records in 'conventional way'. We hope you enjoy it!
Podcast episode 'Erbbaurecht' - total transcript
Moderator Petra Konradi:
You have already read it in the title - in this episode we clarify compactly and to the point the most essential concerns on the subject of hereditary building rights. Because the arrive on which you develop your home does not always need to come from you. The hereditary structure right makes it possible to lease a plot of land and pay the owner in return an annual quantity, the so-called ground rent.But even if land rates continue to rise ... Is it worth it for you? And if so, under what situations? What is really behind the heritable structure right? And what should you take notice of? We now clarify these questions with Tim Wistokat. He is a legal representative and head of the legal department at VON POLL IMMOBILIEN.
My name is Petra Konradi, I am the host of the podcast. Welcome.
Tim Wistokat, legal representative and head of the legal department at VON POLL IMMOBILIEN:
Hello Ms. Konradi, thank you very much for the invitation.
Initially look, the heritable building right appears to be a cost-efficient option to purchasing land. However, it is recommended to weigh both options and to consider some risks.
Mr. Wistokat, building on another person's land - how does that work?
Well, virtually speaking, it's very simple initially. The grantor of the ground lease, i.e. the owner of the land, transfers to the leaseholder, i.e. the renter of the land, a right to utilize the land in concern. The latter might then develop a residential or commercial property on it or buy a residential or commercial property already located on the land. Thus, the ground lease holder becomes the owner of the residential or commercial property, however not the owner of the land.
In return, the renter pays a kind of rent?
Yes exactly, we are discussing the annual ground lease. Previously, it was also called genetic lease, which is basically freely negotiable in the quantity. As a guideline, nevertheless, the quantity of the ground rent has to do with 3 to 5% of the land worth.
The special feature and hence likewise a point that ought to be considered thoroughly by the tenant: The ground rent can be changed every three years by the ground lease service provider.
What else should prospective renters consider?
In addition to the concurred payments, the parties ought to agree on maintenance and the possibility of making structural modifications to the existing residential or commercial property.
In addition, it ought to be clarified ahead of time whether the residential or commercial property might be sublet by the leaseholder. In order to tape-record all contracts in composing, the celebrations involved conclude a ground lease contract therefore that this is legally binding, it is notarized by the notary.
Followed by the registration of the ground lease in the land register of the residential or commercial property and in addition in an individually developed ground lease land register.
Can anybody give a heritable building right?
In concept, yes.
In principle, anyone can grant a heritable structure right. In practice, nevertheless, land is mainly leased by municipalities, churches, communities or business. Especially the church often appears in Germany as a lessor of land, so regarding allow young families with less equity to purchase property or build a home.
The trick is typically in the information, even with genetic structure rights?
Yes, I can confirm that. As a guideline, the regard to the ground lease is in between 50 and 99 years. After the expiration of the ground lease, the ground lease ends and the residential or commercial property becomes the residential or commercial property of the ground lease service provider. However, the latter must then pay the leaseholder suitable payment for the structure and this is based upon the present market price.
Even in case of a sale or inheritance of the land or residential or commercial property, the hereditary building right does not expire as a right of use in rem. Rather, the brand-new owner of the land or realty takes control of the leasehold agreement along with its staying term. However, this does not imply that the predetermined term is automatically renewed or extended. It is rather to be comprehended in the sense that a brand-new start of the term can be negotiated with the brand-new owner. The more remaining term is left, the much better the opportunities are, naturally, when the residential or commercial property is resold.
What is it about the so-called reversion?
If the leaseholder does not satisfy his legal commitments or does not pay the agreed ground rent for a minimum of two years, the landlord can assert his right of reversion. In this so-called right of reversion, the leaseholder needs to return the ground lease to the landowner. The agreement is ended prematurely and the ground lease company ends up being the owner of the building. However, care should be taken here. In the occasion of a reversion, the ground lease owner need to also compensate the leaseholder properly. Here, too, there is the possibility that the celebrations concur amongst themselves on an equally acceptable extension of the contract.
In addition, although the ground lease grantor can approve the ground lease holder a right of first rejection on the residential or commercial property, the ground lease holder is not entitled to an agreement extension.
For whom is the ground lease rewarding?
Tim Wistokat:
Who has little equity, but still does not wish to do without a home of their own, for which the heritable structure right can be rewarding under certain situations, considering that just the purchase rate for your house, however not for the land must be raised. In this case, the total quantity genuine estate financing is naturally rather lower. Prospective buyers then pay in addition to the purchase cost for the residential or commercial property generally still the residential or commercial property tax, insurance and upkeep costs and the annual ground lease.
Petra Konradi:
First off, the leasehold seems to be appealing for prospective purchasers with only little equity. But a closer appearance exposes some not insignificant issues. Probably the biggest disadvantage: While the repayment of a routine bank loan for a plot of land ends over time, the ground rent continues to run up until completion of the agreement. Especially in times of low interest rates, traditional funding frequently shows to be more financially advantageous.
In addition, the ground rent can be changed every 3 years. Due to this, there is a possibility that the ground rent payments will exceed the total land expense over the years. Although a regular genuine estate purchase generally seems more expensive in the acquisition, it typically shows to be less complex and cheaper in the long run.
If you have any questions about this or other topics, please feel free to contact our specialists or find a lot more info on our website and in the VON POLL IMMOBILIEN - App. You can discover the links in the program notes of our podcast.
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